Interim Report Q1 2018
JANUARY 1 – MARCH 31, 2018
(compared with the corresponding period a year ago)
- Net sales increased 10.9% to SEK 28,020m (25,268)
- Organic net sales, which exclude exchange rate effects, acquisitions and divestments, increased 3.4%
- Operating profit before amortization of acquisition-related intangible assets (EBITA) rose 6% to SEK 2,760m (2,596)
- Adjusted operating profit before amortization of acquisition-related intangible assets (EBITA) rose 7% to SEK 3,119m (2,917)
- Higher raw material costs had a negative impact of SEK 755m on earnings
- Adjusted EBITA margin declined 0.4 percentage points to 11.1% (11.5)
- Adjusted profit before tax rose 1% to SEK 2,660m (2,630)
- Profit for the period increased 4% to SEK 1,726m (1,656)
- Earnings per share were SEK 2.08 (2.08)
- Adjusted earnings per share increased 2% to SEK 2.61 (2.55)
- Cash flow from current operations decreased 26% to SEK 1,685m (2,282)
 Indicative earnings per share on the assumption that the number of issued shares in Essity as of March 31, 2017 corresponded to the number of issued shares in Essity on March 31, 2018 (702.3 million).
SUMMARY OF FIRST QUARTER OF 2018
The Group’s net sales for the first quarter of 2018 increased 10.9% compared with the corresponding period a year ago. Organic net sales increased 3.4%, of which volume accounted for 2.5% and price/mix for 0.9%. In emerging markets, which represented 35% of net sales, organic net sales rose 6.3%, while the increase in mature markets was 1.6%.
During the quarter, four innovations were launched that strengthened Essity’s customer and consumer offering. Within Tissue Roadmap, investments and further restructuring measures were decided to strengthen the product offering and increase efficiency in Consumer Tissue and Professional Hygiene.
The Group’s adjusted EBITA in the first quarter of 2018 increased 7% compared with the corresponding period a year ago. Excluding currency translation effects and acquisitions, adjusted EBITA declined 5%. Higher volumes, a better price/mix, cost savings of SEK 232m and the acquisition of BSN medical had a positive impact on earnings. Higher raw material costs had a negative impact of SEK 755m on earnings. The higher raw material costs during the quarter were partially offset by price increases mainly in Consumer Tissue in Asia and Professional Hygiene. Price increases were also carried out in Consumer Tissue in Europe during the quarter, which have yet to impact earnings. The Group’s adjusted EBITA margin decreased 0.4 percentage points to 11.1%. The adjusted return on capital employed was 11.9%.
Organic net sales for the acquired company BSN medical for the first quarter of 2018 were in line with the corresponding period in 2017. The adjusted EBITA margin for the acquired company was 17.5% and was negatively impacted by about 0.2 percentage points due to integration costs. The integration is proceeding according to plan and generating the expected synergies.
INVITATION TO PRESS CONFERENCE ON INTERIM REPORT Q1 2018
Media and analysts are invited to a press conference, where this interim report will be presented by Magnus Groth, President and CEO.
Time: 10:00 a.m. CET, Friday, April 27, 2018
Location: Essity’s headquarters, Waterfront Building, Klarabergsviadukten 63, Stockholm, Sweden
The presentation will be webcast at www.essity.com. To participate by telephone, call: +44 (0) 203 009 57 10, +1 866 869 23 21 or +46 8 506 921 85. Specify “Essity” or conference ID no. 2584918.
Link to webcast: https://essity.videosync.fi/2018-04-27_q1
For further information, please contact:
Fredrik Rystedt, CFO and Executive Vice President, +46 8 788 51 31
Johan Karlsson, Vice President Investor Relations, Group Function Communications, +46 8 788 51 30
Joséphine Edwall-Björklund, Senior Vice President, Group Function Communications, +46 8 788 52 34
Media Relations, Group Function Communications, +46 8 788 52 20
This information is such information that Essity Aktiebolag (publ) is obligated to make public pursuant to the EU Market Abuse Regulation. This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern. The information was submitted for publication, through the agency of the contact person set out below, at 8:00 a.m. CET on April 27, 2018. This interim report has not been reviewed by the company’s auditors.
Karl Stoltz, Media Relations Manager, +46 8 788 51 55